Can an Ontario corporation split into two separate corporations through a reorganization?

Yes. An Ontario corporation can split its business or assets into two separate corporations, most commonly through a plan of arrangement under the Business Corporations Act, where the court approves a coordinated set of steps: transferring specific assets or business lines to a new or existing corporation, and issuing shares of each resulting corporation to shareholders according to an agreed formula. Because a split usually touches share capital, asset ownership, and shareholder rights all at once, an arrangement is often the cleanest way to implement it in a single, legally binding transaction rather than through a series of separate, sequential steps.

Splits are used for reasons like separating an operating business from real estate or investment assets, dividing ownership between founders who want to go their own ways, or isolating a higher-risk business line from a stable one. The specific structure matters a great deal, including how liabilities are allocated between the two resulting corporations and what happens to existing contracts, financing, and security registrations.

Tax consequences of a corporate split can be significant and are decided under separate federal tax rules, so this is an area where corporate and tax advice need to go hand in hand from the planning stage.